Refinance Before Your Loan Matures, Not After
A wave of commercial loans written in the low-rate years is coming due. Refinance early to lower your payment, pull out equity, or replace maturing debt on your own timeline.
Rate-and-Term and Cash-Out Refinancing for Commercial Property
A commercial refinance replaces your existing loan with new debt, either to improve the rate and term or to pull equity out of the property through a cash-out. The timing matters more than ever. A large share of commercial mortgages written during the low-rate years are hitting maturity, and many were underwritten at values and rates that no longer hold. Refinancing ahead of that maturity wall gives owners room to restructure on their own schedule instead of scrambling when the balloon comes due. A rate-and-term refinance lowers your monthly payment or extends your amortization without changing the loan balance much. A cash-out refinance taps the equity you have built to fund improvements, acquire another property, or return capital to investors. The catch on many existing loans is the exit cost. CMBS and life company loans often carry defeasance or yield maintenance provisions that make an early payoff expensive, and we model those costs before recommending a refinance so the numbers actually work. CapitalAx places refinances through banks, credit unions, agency lenders, CMBS conduits, and life insurance companies across every major property type.
Key Terms
Who Is It For
- Owners facing a loan maturity or balloon payment in the next 12 to 24 months
- Borrowers looking to lower a rate or extend amortization on an existing loan
- Investors who want to pull built-up equity out through a cash-out refinance
- Property owners exiting a bridge or construction loan into permanent debt
- Sponsors returning capital to partners without selling the asset
Common Use Cases
- Rate-and-term refinance to lower payments or extend the amortization schedule
- Cash-out refinance to fund improvements, acquisitions, or investor distributions
- Replacing maturing debt ahead of a balloon payment
- Refinancing out of a bridge or construction loan into permanent financing
- Restructuring loan terms as property income grows
Borrower Scenarios
- An apartment owner with a CMBS loan maturing inside two years, starting a rate-and-term refinance early and modeling the defeasance cost on the existing debt against the new terms to confirm the move penciled before committing.
- An industrial property owner with substantial equity built over years of ownership, using a cash-out refinance to pull capital and fund the acquisition of a second warehouse without selling the first.
- A sponsor exiting a bridge loan on a repositioned retail center that has reached stabilized occupancy, refinancing into long-term fixed permanent debt with a life company lender.
- A multifamily owner facing a balloon payment, starting the refinance well ahead of maturity to move into agency debt with a longer amortization, lowering the monthly payment and locking a fixed rate.
- A mixed-use investor with 4 residential and 4 retail units, all leased, pulling equity through a $1.5M cash-out bridge from a family office lender, structured as 12-month interest-only to fund a separate acquisition without selling the asset.
Why CapitalAx
Related Loan Programs
Frequently Asked Questions
When should I refinance a commercial property?
The best time to start is 12 to 24 months before your current loan matures. Beginning early gives you room to shop lenders, address any property or occupancy issues, and lock terms before you are forced to refinance at maturity. Many CMBS and agency loans also lock out prepayment entirely for a defined period, which is another reason the timeline gets planned that far ahead. With a large volume of loans reaching their balloon dates, lenders are busy, so starting early protects you from a rushed and expensive payoff.
What is the maturity wall?
It refers to the large volume of commercial mortgages, many written during the low-rate years, that are coming due at roughly the same time. Many of these loans were underwritten at higher values and lower rates than the current market supports, which makes refinancing more complicated. Planning ahead of your own maturity date keeps you from competing for capital at the worst possible moment.
What are defeasance and yield maintenance?
Both are prepayment structures that protect the lender's expected yield if you pay off early. Yield maintenance charges a make-whole fee on the interest the lender would have earned, and the cost is rate-dependent, so it can be severe when market rates have fallen below your note rate. Defeasance substitutes a portfolio of securities for the property as collateral, is standard on CMBS loans, and carries its own transaction cost plus a process that generally takes 30 to 60 days. We calculate the cost under either structure before recommending a refinance.
How much can I pull out with a cash-out refinance?
Cash-out refinances generally cap leverage 5 to 10 points below a rate-and-term refinance. Where a rate-and-term generally reaches 70-75% LTV with DSCR around 1.20-1.25x, cash-out executions generally top out at 65-70% LTV, because the lender is advancing proceeds above the existing balance and wants more equity cushion behind the new loan. Actual proceeds depend on the appraisal, the property's income, and the program.
When does a bridge-to-perm refinance beat waiting for permanent debt?
Bridge makes sense over waiting in two situations. Either the property is not yet stabilized enough to support the agency or permanent loan proceeds you need, or your maturity date arrives before stabilization does. In both cases the bridge buys time to finish lease-up or renovations, then exits into permanent financing once the numbers support it. Every refinance is underwritten on its own merits. The ranges on this page reflect where the market generally prices. Actual leverage, coverage requirements, and terms depend on the property, the program, and the specific lender.